Wednesday, September 17, 2008

Buddhist Economics – Part I

An Overview

Let us expand the scope of our ideas on
Financial Intelligence to a larger scale. How would a financially intelligent economic system work? I believe that the answer lies with Buddhist Economics. The term ‘Buddhist Economics’ was first coined by E. F. Schumacher in his book ‘Small is Beautiful’ which was ranked among the 100 most influential book published after World War II. In this series of posts, we will examine and discuss the core ideas in his book.

On Labor
‘Right Livelihood’ is one of the requirements of the Buddha’s Noble Eightfold Path. It is clear, therefore, that there must be such a thing as Buddhist economics.

There is universal agreement that a fundamental source of wealth is human labour. Now, the modern economist has been brought up to consider ‘labour’ or work as little more than a necessary evil.

Employer’s View
From the point of view of the employer, it is in any case simply an item of cost, to be reduced to a minimum if it can not be eliminated altogether, say, by automation.

Employee’s View
From the point of view of the workman, it is a "disutility"; to work is to make a sacrifice of one’s leisure and comfort, and wages are a kind of compensation for the sacrifice.

Hence the ideal from the point of view of the employer is to have output without employees, and the ideal from the point of view of the employee is to have income without employment.

The consequences of these attitudes both in theory and in practice are, of course, extremely far-reaching. If the ideal with regard to work is to get rid of it, every method that ‘reduces the work load’ is a good thing.

The most potent method, short of automation, is the so-called ‘division of labour’ and the classical example is the pin factory eulogised in Adam Smith’s Wealth of Nations.

Here it is not a matter of ordinary specialization, which mankind has practiced from time immemorial, but of dividing up every complete process of production into minute parts, so that the final product can be produced at great speed without anyone having had to contribute more than a totally insignificant and, in most cases, unskilled movement of his limbs.

Buddhist View on Work
The Buddhist point of view takes the function of work to be at least threefold:
1. To give man a chance to utilise and develop his faculties;
2. To enable him to overcome his ego-centredness by joining with other people in a common task; and
3. To bring forth the goods and services needed for a becoming existence. Again, the consequences that flow from this view are endless.

To organise work in such a manner that it becomes meaningless, boring, stultifying, or nerve-racking for the worker would be little short of criminal; it would indicate a greater concern with goods than with people, an evil lack of compassion and a soul-destroying degree of attachment to the most primitive side of this worldly existence.

Equally, to strive for leisure as an alternative to work would be considered a complete misunderstanding of one of the basic truths of human existence, namely that work and leisure are complementary parts of the same living process and cannot be separated without destroying the joy of work and the bliss of leisure.

I believe that most of us feel our working lives are drudgery and dull beyond disbelief. Why should that be the case? Has it ever occurred to you that our conventional economic system might be somewhat flawed and unsustainable? The following link is a notable example of this: Toyota Workers Finding Job Stressful. Any questions or comments are most welcome.



"From the point of view of the employer, it is in any case simply an item of cost, to be reduced to a minimum if it can not be eliminated altogether, say, by automation."

Tun M said to reduce costs and stay competitive, goment should reduce number of holidays, wtf.

I tot we should ask for more holiday rite? >.<


Dear Ah Keong,

Agreed! Make sure you don't go shopping during the holidays though. Otherwise you waste more money. :)


Damien Tan

Ah, finally, a series on right livelihood. :)

Right livelihood as Buddha said it is a specific series of 5 don'ts. Don't sell weapons, don't sell bodies (prostitution/slavery), don't sell livestock for slaughter, don't sell alcohol or drugs, and don't sell poison. Even if you are a harmless accountant of an arms dealer, I assume you wud be in the red zone.

I think what he meant was to make a living while avoiding harm. Trouble is, how do you define harm. If I'm a hawker selling food for 20 years and didn't realize that my food has caused a few people to die of cancer (maybe it was the plastics I use), is my livelihood wholesome? Does my ignorance absolve me of that responsibility?

What if I manufacture logic chips that find its way into missile guidance systems. Or sell cough mixture to ppl who use it to get high. So many what ifs.

Last point. Some wud argue that as long as your intention of harmlessness is clear, then that's all you need for right livelihood. But some would also say the road to hell is paved with good intentions. Tricky.

Damien Tan

On Keong's comment, money makes the economy go round. When you spend, money changes hands. If everyone stopped spending, money stops flowing. The economy halts. So more holidays = more spending. Everybody happy. In theory. :)


Dear Damien,

I don't subscribe to the spending money boosts the economy theory. Why? Simple because I think we are overspending and wasting a lot of our natural resources.

As to right livelihood, you are right, it's tricky. We just do the best we are able and avoid those industries that we feel are harmful. Just trust your conscience and your heart. Otherwise, nothing will get done.

As to your example, were the chips created specifically with that intention? If not, you cannot be blamed. Just like you cannot blame the manufacturer of knives for the knife killings in London. Same goes for the current contaiminated milk situation in China.


Damien Tan

From a micro perspective you'd be right. A macroeconomist might have a different view though. Free-markets exist on demand and supply. If everybody stops buying, demand falls and prices hit the floor. When money stops flowing, supply chains close, people get laid off, loans default, stock markets plunge. That's at the macro level. (I fear for Penang as I think they might see an exodus in manufacturing). If you lose your job in the process, you'll probably say its bad. But from a personal perspective, yes you'll want to be prudent as much as possible.

As to wastage of natural resources, I'd look at what poeple trade in. If its essential goods like food, then perhaps wastage is a necessary evil we incur to live and raise families. But for luxury items like diamond watches, yes its senseless wastage.

On right livelihood, I think its a general guideline for laypeople who still cannot let go of form and substance. It doesn't remove suffering. It just lessens it. The more I contemplate on it, the more I sense that right livelihood is there to make us think and arrive at a conclusion - that in reality, a life of no harm is only possible if you exist in a system operating outside the principle of duality. That's where there's neither harm nor non-harm, if that makes any sense.


Dear Damien,

Thanks for the valuable input. I think you've given this topic a great deal of thought and it shows.

I'll try to respond to the best of my meager understanding.

On the economy and spending, I think an analogy might be more apt. Take celibacy for instance. Some people argue that being pro-celibate might result in the end of the world. Yet, how many people can actually follow that path? Same thing with being frugal. There are only very few that are able to be frugal. All that we can hope is that they can reduce unnecessary expenditures such as on luxury items that you pointed out. As to the situation in Penang, yes it's quite worrying and I hope that things improve soon.

As to Right Livelihood, I look at it as a continuum where we try to achieve an ideal. Obviously, it is not possible to achieve perfection since this is only possibly by removing ourselves from the sytem. Still, so long as we continuously strive to, that is good enough.


Justin Choo

Hi Avatar,

Your postings are very intellectually inclined. I am just a simple person.

By the way I wonder where you got "Buddhist View Of Work" from. Are they your own interpretation, or are they from the Buddhist scriptures?


Dear Justin,

Don't look at it as being too intellectual. Maybe the language is a bit complicated but the ideas are simple, yes?

As to the Buddhist view of work, it's an excerpt from the 'Small is Beautiful' book. Most likely, it's a stand taken by the author based on his understanding of Buddhism.

Why? If you disagree, feel free to share with us your comments. :)


Damien Tan

Your blog's rated Genius at so yeah maybe its the language, hehe.

Economics and statistical analysis are aspects of financial modeling in the work that I do (sometimes I wonder if I should've stuck with C and Java programming instead, hehe) so not much effort required. You're right, with an ideal in mind and with striving one can change the course of life.

In the pursuit of material well-being, its easy to forget the consequences of the commitments we make, as in the level of suffering they may cause to us and others. Right livelihood serves as a reminder.


Dear Damien,

Yeah, I know. Critics Rant has very loose standards. The English here is only college or undergraduate level at Website Grader. Very cool SEO grader. All blog owners should check it out :)

Wow, you should post about the work you do in your blog sometimes. Sounds interesting to me :)


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